Where Would You Put Money Now? |
18 Comments |
Every so often, I like to look at the market pulse and try to determine where I would invest new money. I do this even when I don’t have money to invest. I find that it’s not only a fun game to play, but I learn a lot in the process. In the past, I’ve found that I’m better off buying securities at a bargain than going for the current hot sector. I look at the market now and this is what I’m seeing:
- The price for a barrel of oil is at or close to an all-time high.
- The Dow Jones index is very close to being at an all-time high.
- Gold is the highest it’s been in 20+ years.
- The hot sector play seems to be emerging markets which is also extremely high.
- China indexes are extremely high relative to where they were 6 months ago.
There are a lot of good reasons why the above is true. I can’t see a reason why all the above can’t go even higher than they already are. However, I’m not sure I can make a case that they are bargains. In looking for bargains, I find myself liking regional banks. Specifically if I had a little play money in a Zecco account, I might buy this regional bank ETF. Would you buy the bargains or ride the some of the highs higher? What specifics investments would you buy?
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January 4th, 2008 at 8:11 pm
Don’t touch the DOW or any stock with a ten pole.
November 2nd, 2007 at 2:24 pm
As an investor from the UK, I think our banks are now looking ridiculously cheap, particularly RBS, even accounting for the fact that profits are likely to be lower.
Also think housebuilders will recover from their lows in 2008, although I think they may have further to fall in 2007.
October 22nd, 2007 at 8:19 am
You could look at home builders like BZH and KBH. Canadian Royalty Trusts like AAV and PWI are still recovering from last year’s fall as well.
But there’s a lot to be said for cash! I agree that a lot of sectors seem too high right now.
October 19th, 2007 at 10:39 am
Will: It’s an ETF that attempts to track the regional banking sector. I don’t know if I’d be a good stock picker, but I like to look at sectors in general and I think ETFs are a great way to do that - as long as you can keep commissions limited
October 19th, 2007 at 9:51 am
I agree with what you say about not jumping on the hot stock bandwagon (unless, say, one of them takes a major one or two-day dip)… but a random regional bank? Any reason for picking that one in particular?
October 19th, 2007 at 4:12 am
LazyMan, I only have index funds in my portfolio but there is one and only one stock that I have bought and kept since I started investing: Berkshire Hathaway. I don’t have to tell you all about the marvels of Warren Buffett but it’s really nice when the whole market (even foreign markets) goes down and BRK.B (I can only afford a B share) chews into that loss. It’s a great diversifier.
Plus it helps that I have such blind faith in the Church of Warren.
October 18th, 2007 at 11:01 am
financials, insurance, and pharmaceuticals. Despite the subprime mess, there are solidly rich banks out there that will only get richer regardless of subprime. It will take another two quarters for the subprime affect to be clear, and then the financials will continue upwards again. They are too cheap right now and the numbers just don’t add up for them to be this low, moreover, the dividends can offset in the meantime.
insurance companies always end up making money and will continue to do so.
pharmaceuticals and all those old people service companies seeing as lots of people becoming older these days and in the near future.
i think you can ride the gold wave right now, but the fundamentals for the rise are not there. I see it as another parabolic spike that will plunge again to the $400 and below levels.
oil, oil, and more oil right now. once oil reaches $100, companies like Chesapeake will fly as well as companies in alternative fuels.
October 18th, 2007 at 8:27 am
I’d definitely stray towards the foreign investments. I mean in some ways all these highs we’re seeing is because of the decline of the dollar. It’s not just that oil or gold is expensive, but the dollar is cheap. Given our savings habits, and government deficit, I’m not sure that’s about to reverse course. Invest in Berkshire Hathaway, and hope Buffet lives another century….